Exercise 12-15 Dropping or Retaining a Segment [LO12-2]
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows:
| Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 |
||||||
| Sales | $ | 450,000 | ||||
| Variable expenses: | ||||||
| Variable manufacturing expenses | $ | 130,000 | ||||
| Sales commissions | 50,000 | |||||
| Shipping | 14,000 | |||||
| Total variable expenses | 194,000 | |||||
| Contribution margin | 256,000 | |||||
| Fixed expenses: | ||||||
| Advertising (for the bilge pump product line) | 22,000 | |||||
| Depreciation of equipment (no resale value) | 110,000 | |||||
| General factory overhead | 50,000 | * | ||||
| Salary of product-line manager | 111,000 | |||||
| Insurance on inventories | 5,000 | |||||
| Purchasing department | 59,000 | † | ||||
| Total fixed expenses | 357,000 | |||||
| Net operating loss | $ | (101,000 | ) | |||
*Common costs allocated on the basis of machine-hours.
†Common costs allocated on the basis of sales dollars.
Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses.
Required:
What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
In: Accounting
Exercise 12-15 Dropping or Retaining a Segment [LO12-2] Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 Sales $ 490,000 Variable expenses: Variable manufacturing expenses $ 124,000 Sales commissions 51,000 Shipping 21,000 Total variable expenses 196,000 Contribution margin 294,000 Fixed expenses: Advertising (for the bilge pump product line) 23,000 Depreciation of equipment (no resale value) 105,000 General factory overhead 31,000 * Salary of product-line manager 116,000 Insurance on inventories 12,000 Purchasing department 45,000 † Total fixed expenses 332,000 Net operating loss $ (38,000 ) *Common costs allocated on the basis of machine-hours. †Common costs allocated on the basis of sales dollars. Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses.
Required: What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
In: Accounting
|
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows: |
| Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 |
||||||
| Sales | $ | 420,000 | ||||
| Variable expenses: | ||||||
| Variable manufacturing expenses | $ | 123,000 | ||||
| Sales commissions | 53,000 | |||||
| Shipping | 22,000 | |||||
| Total variable expenses | 198,000 | |||||
| Contribution margin | 222,000 | |||||
| Fixed expenses: | ||||||
| Advertising | 30,000 | |||||
| Depreciation of equipment (no resale value) | 104,000 | |||||
| General factory overhead | 34,000 | * | ||||
| Salary of product-line manager | 119,000 | |||||
| Insurance on inventories | 14,000 | |||||
| Purchasing department | 46,000 | † | ||||
| Total fixed expenses | 347,000 | |||||
| Net operating loss | $ | (125,000 | ) | |||
| *Common costs allocated on the basis of machine-hours. |
| †Common costs allocated on the basis of sales dollars. |
|
Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses. |
| Required | |
| a. |
Compute the increase or decrease of net operating income if the product line is continued or discontinued. (Decreases should be indicated by a minus sign.) |
In: Accounting
1)
In: Finance
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing losses on its bilge pump product line for several years. The most recent quarterly contribution format income statement for the bilge pump product line follows:
|
Thalassines Kataskeves, S.A. Income Statement—Bilge Pump For the Quarter Ended March 31 |
||||||
| Sales | $ | 410,000 | ||||
| Variable expenses: | ||||||
| Variable manufacturing expenses | $ | 120,000 | ||||
| Sales commissions | 53,000 | |||||
| Shipping | 16,000 | |||||
| Total variable expenses | 189,000 | |||||
| Contribution margin | 221,000 | |||||
| Fixed expenses: | ||||||
| Advertising (for the bilge pump product line) | 30,000 | |||||
| Depreciation of equipment (no resale value) | 112,000 | |||||
| General factory overhead | 50,000 | * | ||||
| Salary of product-line manager | 114,000 | |||||
| Insurance on inventories | 14,000 | |||||
| Purchasing department | 49,000 | † | ||||
| Total fixed expenses | 369,000 | |||||
| Net operating loss | $ | (148,000 | ) | |||
*Common costs allocated on the basis of machine-hours.
†Common costs allocated on the basis of sales dollars.
Discontinuing the bilge pump product line would not affect sales of other product lines and would have no effect on the company’s total general factory overhead or total Purchasing Department expenses.
Required:
What is the financial advantage (disadvantage) of discontinuing the bilge pump product line?
*Please show work and how you got the answer :)
In: Accounting
Match the term to the most correct definition:
The reason for a city's existence along with its future growth or decline, what it offers that other cities do not, and what attracts business and people:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
Resources in the production process (such as capital, labor, and raw materials) that are used by businesses to produce products:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
The phenomena whereby firms will tend to locate near each other because of shared inputs or information (which benefits their production):
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
Activities that produce goods and services for consumption outside the community, and drive the local economy:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
Activities that produce goods and services for the local economy, and circulate money that is already in the local market:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
The classification system used by the Bureau of Economic Analysis to identify different industries:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
The ratio of total employment to estimated basic employment in a community, which is used to estimate the impact of additional basic jobs:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
An analytical statistic that measures a region’s industrial specialization relative to a larger geographic unit (usually the nation):
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
A method compares community level employment information, not to the nation, but to other communities of similar size:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
A condition that leads to over-estimated multipliers in states like Florida where a large amount of the population is retired and spending income that was not earned there:
[ Choose ] location quotient comparative advantage agglomeration economies factors of production NAICS basic employment non-basic employment transfer income minimum requirement economic base multiplier
In: Operations Management
EBay is a secondary market for goods in the same way that the NYSE is a secondary market for stocks. Explain how EBay users helps keep prices efficient for any generic good (if you need a tangible example, how about a Make America Great Again hat?). This mechanism should be analogous to how traders keep prices efficient for stocks. Be detailed in your explanation to walk through the exact mechanism.
In: Finance
If social motives for both consumption and positional goods are important, …
a. “More is better” applies at the individual level but not the societal level.
b. “More is better” applies at the societal level but not the individual level.
c. An increase in my neighbours’ consumption increases my utility.
d. An increase in my neighbours’ consumption has no effect on my utility.
e. It still cannot explain the success of the Kardashians.
In: Economics
Suppose that there are two goods, X and Y. The utility function is ?(?, ?) = 5?2 ?. The price of Y is $2 per unit, and the price of X is P. Income is $2,400.
A.) Derive the demand curve and state the law of demand in relation to your product or service.
B.) ? = 800 − 10?0.5 . Calculate elasticity of demand when Q=100, Is the good elastic?
C.) ? = 800 − 10?0.5 − 0.5?. Calculate elasticity of income when Q=4 and I=100. Is the good normal or inferior?
D.) ?A = 80 − 10?0.5 − ?B Calculate cross price elasticity when Q= 16 and ?B =10. Are the goods complementary or are they substitutes?
In: Economics
Consumers' ability to substitute among different goods explains
In: Economics